The Concept of Token Burning: How Does It Work?
Have you ever come across the terms "crypto burning," "coin burn," or "token burning" in the world of cryptocurrency? These terms all refer to the same concept, where certain cryptocurrency tokens or coins are intentionally removed from circulation.
The tokens or coins are typically sent to a wallet address with no known private key, rendering them inaccessible and effectively "burning" them, making them permanently unusable.
Crypto burning serves various purposes and can be implemented for different reasons by projects or cryptocurrencies
One common objective is to create scarcity and increase the value of the remaining tokens in circulation. By reducing the supply, the demand for the remaining tokens may potentially rise, leading to an increase in their price. This is similar to the principles of supply and demand in traditional economics.
Furthermore, token burning can be employed as a mechanism to reward token holders indirectly. With a reduced supply, the ownership percentage of existing token holders will increase, granting them a larger stake in the project's ecosystem. This, in turn, may incentivize long-term holding and discourage short-term speculation or dumping of tokens.
KuCoin's KCS token is a great example of a token that regularly holds burning events. KuCoin does this to give potential investors confidence that the token's supply will continue to decrease over time. This approach helps ease worries about inflation or having too many tokens in the market. Again by reducing the token supply, the value of each token may increase, making it more attractive to investors.
Image from KuCoin
The most recent KuCoin KCS Burn occurred yesterday, during which the KCS team executed the burning of 61,209 KCS tokens. This means that 61,209 KCS tokens were intentionally removed from circulation, effectively reducing the number of tokens available in the market. The estimated value of this burning event is 402,977 USDT, which represents the equivalent value of the burned tokens.
Right now, there are 96,732,986 KCS tokens available for trading or use by people. These are the tokens that are actively circulating. In total, there are 144,232,986 KCS tokens, including ones not currently in circulation.
By the way, if you have KCS in your bag or have plans to buy it, below are the options you have to earn from it:
KCS Daily Bonus: If you keep KCS in your KuCoin trading account, you can get a daily bonus. This bonus comes from the trading fees generated by KuCoin, and they share a part of it with KCS holders.
Staking on Skcs, Kucoin, and Mojitoswap: Staking KCS on these platforms can be another way to earn rewards. In return for your contribution, you may receive rewards in the form of additional KCS tokens or other cryptocurrencies.
Lockdrop/Burningdrop/Spotlight: KuCoin sometimes organizes special events where you might need to lock up or burn some KCS tokens to participate. By taking part in these events, you may get new tokens or other benefits.
Also, having KCS on KuCoin offers an added advantage of a 20% discount on trading fees, providing you with a cost-effective trading experience.
Closing Thoughts
Without a doubt, token burning is super important in the crypto world as it has a big impact on how different projects work. As an investor and enthusiasts, it's crucial for us to understand token burning and how it affects a cryptocurrency's value and overall system. To highlight, when tokens are burned, there are fewer of them available, which can make the ones left more valuable. This benefits the people who hold those tokens. It also encourages us to think long-term and not rush to sell our tokens.
